LUNA is a cryptocurrency that ensures the stability of the Terra ecosystem and its basis of digital currency.
Cryptocurrency performs two main functions:
- Used to mine new Terra blocks based on the Proof of Stake algorithm. Just as the hash power of miners in the Bitcoin network represents a proportional chance of generating new blocks in the Bitcoin network, the percentage of LUNA coins represents the chance of creating Terra blocks;
- Serves as direct protection against price fluctuations of the Terra cryptocurrency. Allows you to maintain the price of coins at level 1 SDR (special drawing rights). SDR is an international reserve asset, the price of which is determined depending on the value of the US dollar, Chinese yuan, Japanese yen and British pound sterling in the ratio of 41.73%, 30.93%, 10.92%, 8.33% and 8.09 %
LUNA cryptocurrency issue is 1 billion coins. The distribution of tokens is as follows: 40% for Terra Alliance partners and the first strategic investors, 20% for a stable reserve fund, 20% for team members, 20% for private and public investors.
Terra is a blockchain-based payment system. It is based on a stable coin, which retains its value using the mechanism of increasing and decreasing the number of coins depending on demand. To keep Terra at the same price, LUNA actually acts as a market maker. It looks like this:
- If the price falls below the target level of 1 SDR, the protocol buys 1 Terra coin, while selling LUNA at a cost of 1 SDR;
- If the price has risen above 1 SDR, the protocol sells 1 Terra coin, while earning LUNA worth 1 SDR.
In June 2019, the Terra blockchain payment system was introduced into the CHAI app. Just a few months after the launch, CHAI reached over 400,000 unique users in Korea. Integration with large banks simplifies interaction for users and allows you to make a purchase in stores in just a few clicks.
Terra is an e-commerce platform alliance partner that will use the payment system to make payments. This alliance includes giants of the Asia-Pacific region such as TMON, Woowa Brothers, Ebates, Carousell and Tiki, it includes more than 25 platforms that together process more than $ 40 billion a year.
Now developers are concentrated on the online payment market in Korea, but they plan to expand in the future. The capabilities of the system are very wide – it can be implemented in various decentralized financial products, for example, high-yield savings, lending, cross-border payments, and more.
The potential applications of Terra are huge. Now the system is used as an intermediary in online payments, allowing people to freely make online purchases. The project aims to become an advanced platform on the blockchain, opening up all the possibilities of decentralization for ordinary users, sellers and developers.